This 3-D bird's-eye rendering shows the new cathode plant to be built by LG Chem, Korea's top chemical maker, in the U.S. state of Tennessee by 2025, as provided by the company, Nov. 22. Yonhap

LG Chem, Korea's top chemical producer, said Tuesday it will build its first U.S. cathode plant in Tennessee as it accelerates its overseas push in North America to respond to the growing demand for electric vehicle (EV) components.

LG Chem will spend at least $3 billion for the project to build the facility capable of producing 120,000 tons annually of the critical component consisting of nickel, cobalt, manganese and aluminum, which determines the power of the lithium-ion battery cells, the Seoul-based company said in a release.

The annual production target will be enough for about 1.2 million pure EVs with a range of 500 kilometers per charge, LG Chem said.

The factory will be located in Clarksville, on a plot of land stretching 1.7 million square meters.

The construction will start in the first quarter of next year, and the plant will go into operation at the end of 2025.

The signing ceremony for the cathode plant project took place in Tennessee on Monday (U.S. time), attended by Gov. Bill Lee, Stuart McWhorter, commissioner of the Department of Economic and Community Development, and LG Chem CEO Shin Hak-Cheol, among others.

This image shows cathode material product manufactured by LG Chem. Yonhap

"The new cathode manufacturing facility in Tennessee brings us one step closer to becoming the world's best battery materials manufacturer and fulfilling our corporate vision to become a top global science company," Shin said.

"This site will be the North American manufacturing center of excellence for the cathode supply chain," he added.

Cathodes are a key material in lithium-ion battery cells that determine the capacity and life of an EV. Securing a stable supply of cathode materials has increasingly become an important factor for EV battery makers amid higher mineral costs. Cathodes account for about 40 percent of a battery's production cost.

The changing business landscape in the United States has also been prodding global EV component manufacturers, like LG Chem, to quicken the steps for the facility expansion in the region.

The new U.S. law on EVs, or the Inflation Reduction Act, over the years will require EV batteries to be made with higher portions of minerals processed or mined in the U.S., or elsewhere that have free trade pacts with the country.

LG Chem said it aims to boost its sales in the battery materials segment by fourfold to 20 trillion won ($14.7 billion) by 2027 from 5 trillion won in 2022. (Yonhap)